Verizon Axes FIOS Expansion

Have you been lured by the temptation of Verizon's FIOS service and are just waiting for the day until the company's fiber-optic mishmash of Internet, telephone, and TV connectivity snakes its way to your front door? Keep waiting.

Have you been lured by the temptation of Verizon's FIOS service and are just waiting for the day until the company's fiber-optic mishmash of Internet, telephone, and TV connectivity snakes its way to your front door? Keep waiting.

According to the Associated Press, Verizon is indicating that it's ready to stop replacing antiquated phone lines with its fiber-backed network for new locations, preferring instead to improve the connectivity of areas that are already fiber-friendly.

In other words, unless your neighbor has FIOS and you don't, you're likely out of luck.

It's been no small sum for Verizon to come close to hitting its goal of wiring up 18 million households with fiber service by the end of 2010. The Associated Press reports that Verizon budgeted away $23 billion for such conversions between 2004 and 2010that might sound like a lot, but it costs Verizon roughly $750 per household to wire up an entire neighborhood, as well as an additional $600 per house on top of that amount.

The company's fact sheet boasts that FIOS's connectivity "passed" 15.4 million households by the end of 2009. But some blogs note that this is a bit of a misleading statement: To count as "passed," FIOS lines only have to "get close to" a house, not actually service a house with up to 50 Mbps of downloads and 20 Mbps of uploads (at $145 per month for customers lacking home Verizon phone service). That would make Verizon's claim that 48 percent of its total customer base uses FIOS a bit stretched, to say the least.

So where does that leave the FIOS service? Predominantly clustered in the East Coast, for starters. Of the 16 states with FIOS access, only a few outliers like California, Washington, and Texas escape the perhaps-unwritten requirement that high-speed connectivity need touch the Atlantic in some fashion. Communities that have already secured franchise agreements with FIOS will continue to receive new fiber linksjust not those like Alexandria, Virginia, who was only able to get a telephone franchise in place before Verizon pulled the plug on its expansions.

"It was our understanding that once the telephone franchise was signed that they would begin construction [on the fiber optic network] while negotiating the cable franchise to bring the full FiOS service to the city," said Rose Boyd, director of citizen assistance in Alexandria, according to the Washington Business Journal.

But Verizon put those negotiations on hold a few months later as it conducted an assessment, the city said.

After Euille inquired about when FiOS could move forward in the city, Robert Woltz, Verizon's president for Virginia, sent a response that was dated Feb. 18 but received by the city March 9, explaining that Verizon had enough agreements in place to meet its goals for national deployment. "As a result, we will not be able to add the city of Alexandria to our existing portfolio, and at this point, I do not know when that will change," the letter read, according to the Business Journal.

It's no small secret that FIOS adoption numbers have waned as of late. While the company boasted 153,000 new FIOS TV and FIOS Internet customers for the fourth quarter of 2009, that's nearly half of the what Verizon was able to pull in during the same time period in 2008: 303,000 new FIOS TV customers and 282,000 new FIOS Internet customers.

The recent push by the Federal Government for affordable national broadband service, a plan that Verizon has gone on record to disagree with, isn't itself a direct reason for the company's departure from FIOS expansion. If anything, notes industry analyst Dave Burstein in an interview with Broadband Reports, Verizon could be a bit jealous of the potential subsidies offered by the FCC's upcoming $4.6 billion "Connect America" fund.

"'They want to get on the gravy train, although I think the new, less competitive leadership is the primary explanation,' says Burstein when asked why Verizon's shifting tactics. Seidenberg, the driving force behind the first wave of FiOS, is on his way out -- and his replacements aren't quite as bullish on angering investors for the sake of this whole 'future' thing."

Of course, that doesn't mean that Verizon is ready to pull the plug on the integration of future technologies into its FIOS network. Just four days ago, Verizon representatives noted on its "Verizon at Home" blog that the company was committed to integrating three-dimensional broadcasts into its service offerings by year's end. More than 2.9 million FIOS TV subscribers will be able to take advantage of the alleged explosion in 3D technology this yearprovided they have a 3D-ready television and, if they're Verizon customers, the right state.

About the Author

David Murphy got his first real taste of technology journalism when he arrived at PC Magazine as an intern in 2005. A three-month gig turned to six months, six months turned to occasional freelance assignments, and he later rejoined his tech-loving, mostly New York-based friends as one of PCMag.com's news contributors.
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